A fake agency got over $1 million in sensitive equipment from the Defense Department

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The Department of Defense (DOD) gave sensitive equipment that is banned for release to the public to a federal agency that does not exist, according to a recently released government report.

The Government Accountability Office (GAO) released the report last month, where it was outlined how they tested the DOD’s Law Enforcement Support Office (LESO) program by creating a fictitious agency to obtain over 100 items of sensitive equipment.

"I was reasonably surprised that they actually accepted us into the program, but if they had scratched the surface a little, the entire facade would've fell apart," Wayne McElrath, GAO's director of investigations, said.

LESO, also known as the 1033 program, is managed by the Defense Logistics Agency (DLA) and allows excess equipment, which could include anything from small arms to furniture, to be transferred to federal, state or local law enforcement agencies. Since 1991, the program has transferred over $6 billion worth of equipment to over 8,600 federal, state and local agencies.

GAO applied to the program by providing things like a name, phone number, website and even an address for a nonexistent federal agency. After their application was approved, they were given over 100 items worth $1.2 million that are typically sensitive and not allowed to be released to the public, including simulated rifles, simulated pipe bombs and night vision goggles, the report said.

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Excess equipment obtained by GAO officials through the LESO program

GAO

Thermal sight

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GAO

Simulated M16A2 rifle

GAO

GAO

Pipe bomb trainer

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GAO

Night vision goggles

GAO

GAO

Range finder laser

GAO

"We left what I call breadcrumbs all over the place,” Zina Merritt, director of defense capabilities at GAO, said. “If they had Googled our physical location, they would have seen that it was an empty lot. They also asked us to provide the statute authorizing our particular organization. If they had Googled the statute that we provided, they would have immediately found out that there was something wrong with that particular application."

The House Armed Services Committee held a hearing on the report soon after it’s release, where many Representatives express concern over the results.

"I am deeply concerned like everybody else is here about this, but I am also very puzzled because it seems to me that there’s more red tape to open up a doughnut shop then there is to get this equipment or that there was and I’m puzzled as to how the rules and regulations could have been so lose that they were able to create this fictitious agency to receive this material," Rep. Carol Shea-Porter (D-NH) said during the hearing.

But the report did not just get the attention of those in the public sector. The Project on Government Oversight (POGO), a nonprofit, was also shocked by the results.

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"One always expects some flaws in the system that just have to make sure there's accountability, but the fact that GO could pose as a police force and very quickly not only gain access to the equipment, but take possession of it was pretty unbelievable," Peter Tyler, an investigator at POGO, said.

And "breadcrumbs" were not just left for DLA in the application. When GAO officials went to pick up the equipment, they also had fake identification and law enforcement credentials, according to the report. It is DLA policy to verify the identities of those picking up the equipment, but GAO officials were able to enter multiple locations where they did not have to show their I.D.

"Perhaps the most frustrating example is the Government Accountability Office folks were able to show up with phony I.D. and get the equipment even more so, their ID wasn't even checked on occasion. This is something that bartenders do," Tyler said.

GAO was directed to test the program by a provision in the National Defense Authorization Act of 2016, but Merritt said it was after they had already started reviewing the program when GAO noticed the name of an agency that did not seem legitimate that had already received equipment, and when they had gone to DOD the department confirmed that particular agency was under investigation.

“I can't talk about the details of that, but we do know that this had in fact happened in the past,” Merritt said.

Moving forward, GAO gave DOD recommendations to strengthen the program. Some of their recommendations included visiting the physical location of the agency to verify the address, better train officials at pickup location to check identification and create a fraud risk assessment process, the report outlined.

And DOD agreed with all of GAO’s recommendations and has already started making changes, the report said, like updating policies, establishing a point of contact at federal agencies and having applicants sign a memorandum of understanding.

In a statement to Circa, the chief of medial relations for DLA Michelle McCaskill said, "DLA takes the findings very seriously, and is actively addressing and correcting deficiencies to resolve breakdowns in the application and validation processes to ensure appropriate property allocations to legitimate federal LEAs. LESO is also developing more specific online training for LEAs and has improved the information on its website to increase understanding of program terms and definitions.”

But GAO is not just going to take DLA for their word that the improvements are being made. Merritt said they will continue to check up on the program to monitor the progress.

And POGO will be right by their side, according to Tyler, ""This is a question not of trust but of verify. It's great that the Department of Defense has made these promises, the Government Accountability Office will very likely continue to check on this to make sure those fixes are in place. As an outside organization, we'll do the same."

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Because though Merritt said there is no proof any of the excess equipment has actually gotten into the wrong hands, this report proved the potential was there.